Just how does domain name appraisal work? I had studied the valuation models behind appraisals. Now it was time to jump in and see how my name, e-commerce-sales.com, might be appraised. I tried two fee-based services, as well as seeing what kind of free appraisals I would get at Afternic.com (recently acquired by Register.com). The results were all over the map, but I think I have a pretty good idea how much I could probably sell the name for after this exercise. Here are the various appraisals and excerpts from the appraiser's comments.
I thought that more than anything else I could do, this kind of review of actual results will help you understand appraisals -- even though it might hurt my chances at getting an overly high price for my domain name.
Appraisals and Reasoning
DomainSystems (formerly SolutionHome.com) prepared a report for me on 9/11/00 for which I paid $19.95. https://www.solutionhome.com/appraisal/index.cfm?action=v&id=SH0000107990 You can read it in its entirety, but here are the excerpts, using the DomainSystems, Inc. Proprietary Appraisal Model: (1) Marketability, Fair ; (2) Name Length, Poor (16); (3) Brand Recognition, Good; (4) Development Value, Fair ; (5) Dot. Value, Excellent (.com); (6) Site Traffic None; (7) Revenue Generating $0. The report didn't contain any personalized comments from the appraiser, but rated the domain name on each item in the valuation model and made a determination.Sales Value = $1,098.00.
DomainAppraise.com (Ari Karp) prepared a report for me on 9/15/00, for which I paid $9.95. Instead of a form letter, this well-known appraiser offers his comments on factors that have guided his appraisal. Here's what he said: "Good name for e-commerce sales activities. A 3-word name, 16 characters (including 2 hyphens), is a long name though. Names like these may have many variations available, but only one has this exact combination. This site is developed and able to generate revenue from product sales. The situation of the name being directly relevant to the Internet and specifically e-commerce tend to increase the value. VALUE: Our initial estimates value this name at around $5500 + (3 X online annual revenue). Note: I don’t believe there are any trademark issues, but the Full Appraisal includes a trademark search. Adding an online e-commerce system could increase your online revenue." The appraiser is incorrect that the site is developed and able to generate revenue; the domain name e-commerce-sales.com is another door to my existing site which is not being offered for sale with the domain name. This might reduce the appraiser's valuation.
on 9/10/00 appraised it at $25,000, with the comments: "Easy to remember name despite the length, hyphens, & chance to misspell. If the owner can hold out the $25k stands. If it was a must sell now, $5k."
"idotcomit"
on 9/10/00 appraised it at $500, with the comment: "I honestly bought much better names at $500."
"Blues"
on 9/10/00 appraised it at $2,050, with the comment: "combination of 3 models plus hit factor then averaged by 4 gave a value of $4100. I find it visually unwieldy, would be hard to radio advertise because of the hyphens, easy mistakes in memory if in print ads. I have to down grade by half to $2050 The "e" "commerce" and "sales" words are very good. Develop the site, make it good and overcome the hyphens through marketing. Market a European site. Hyphens are more accepted as a norm there. European site, well produced with good product sales value could reach six figures or higher. I'd hold and develop ...."
"literaryboy"
on 9/24/00 appraised it at $100, with the comment: "Long, many hyphens, generic terms so it's difficult to brand."
Averaging Appraisals
There you have it. What is it worth if I were to sell it? Normally I might toss out the low and high appraisals, and then average the others. In this case, I would toss out the high of $25,000 and the low of $100. If I take the remaining appraisals of $500, $1,098, 2,050, and $5500, I come up with an average appraisal of $2,287 for the domain name.
Determining What to Do
It's interesting, but probably pretty typical, that the appraisals are still very different. The top appraisal I am considering is still 10X the lowest appraisal. This tells me that the "science" of appraisals is still pretty much in its infancy. Though appraisals can help me determine the ballpark for selling a domain name, there is not yet any reliable way to establish value, and "comps" are pretty sparse on which to judge comparable name sales.
I do think that the $30 I spent on appraisals was money well spent. I recommend using the DomainSystems.com service that I used. They gave a conservative appraisal -- which is probably more realistic than some others. They'll give you a good basis for either knowing what to offer or what to accept for a domain name you are interested in. https://www.solutionhome.com/appraisal/index.cfm?af_id=459
It appears that sales prices for previously-owned domain names is dropping,
since much of the dot-com venture capital money is drying up. On the other hand,
the good .com names will probably appreciate in value since they'll have a
"classic" sound, even though new top-level domains will probably be introduced
in a few months. While an average of $2,287 is a reasonable price for the domain
name, I can renew it and continue to hold it for less than $15 per year. Unless
someone makes me an offer I can't refuse, I don't think I'll auction it or
actively seek to sell it -- just hold it a while longer.
